If a free market policy hurts some people by denying them their subsidies (even very large numbers of people) that should not stop us following that policy.

For example, a pay cut of 10% for all civilian employees of the Federal government – few such employees would resign if this policy was followed (i.e. their pay is not really set by the market – some people might leave, such as skillked FBI investigators, but only a tiny number of people out of the total Federal pay roll), yet I would not pretend that such a policy change would not “harm” Federal government employees.

Although national bankruptcy will evenutally “harm” them even more that is not the point – as I reject the principle (really from J.S. Mill – or an interpretation of him) that policy should not “harm” anyone.

I would cut the government wage bill whether or not the government faced bankruptcy – and I would carry on cutting it (till mass resignations, NOT strikes – which are no sign of anything, came about).

I think people would be surprised to learn just how much government wages could be cut WITHOUT their being mass resignations.

]]>By: Plamushttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201519
Fri, 19 Feb 2010 00:33:03 +0000http://192.168.200.139/?p=13192#comment-201519Paul Marks, fair point, I should have said “chooses to” instead of “has to” (pander for votes). I was offering an explanation for Schiff’s statement, not looking to justify it. I am not trying to defend him, but I can see how such a seemingly un-Austrian claim can be part of a solid Austrian policy view, for example, that in order to compete, US manufacturing needs to be freed of the stranglehold of unions, or that education (not force-fed by the state, mind you) can help to make those service jobs less lower-paying and crappy. He is really stating a fact plus an opinion (that it’s bad). The question is bad for whom? It’s surely bad for those outsourced manufacturing workers – but there are many solid pro-market and pro-liberty policies that would be Pareto-efficient, helping not only the manufacturing sector, but also everyone else.
]]>By: Paul Markshttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201518
Thu, 18 Feb 2010 20:44:48 +0000http://192.168.200.139/?p=13192#comment-201518Services – I repeat that haircuts (and other such) are indeed economic services, just as economic as steel or cars.

However, I also repeat that selling government debt (and other credit bubble stuff) is NOT an economic activity (efforts to claim it is are just double talk).

By the way trying to base an economy of hundreds of millions of people on haircuts and other such (real economic services though they are) will not work. A country the size of the United States (or Britain) must be primarily be about MAKING THINGS.

Moving away from this is not “progress” – although it is “change”. For example the Roman Empire from the second century AD onwards experienced a lot of change – but it was not progress (it was decline).

“What about banking”.

Banking (or rather honest banking) is MONEY LENDING.

One can lend money for consumption (“I want this nice stuff NOW”) – and an economy where most people are consuming more than they create is clearly on the road to Hell (the money comming from the savings of rising nations). But one can also lend money for INVESTMENT.

Real “investment” (not spending just called “investment”).

In short – mines, farms, factories abd so on ( and yes services like barbers shops).

This is the way in which banking is productive – and in no other way.

The belief that banking (and finance generally) can be productive in-its-self (without reference to creating things in the physical economy) is mistaken – it is like the bird the explorers are searching for in “Carry On Up The Jungle” – it ends up going up its own……..

However, I also repeat that selling government debt (and other credit bubble stuff) is NOT an economic activity (efforts to claim it is are just double talk).

By the way trying to base an economy of hundreds of millions of people on haircuts and other such (real economic services though they are) will not work. A country the size of the United States (or Britain) must be primarily be about MAKING THINGS.

Moving away from this is not “progress” – although it is “change”. For example the Roman Empire from the second century AD onwards experienced a lot of change – but it was not progress (it was decline).

“What about banking”.

Banking (or rather honest banking) is MONEY LENDING.

One can lend money for consumption (“I want this nice stuff NOW”) – and an economy where most people are consuming more than they create is clearly on the road to Hell (the money comming from the savings of rising nations). But one can also lend money for INVESTMENT.

Real “investment” (not spending just called “investment”).

In short – mines, farms, factories abd so on ( and yes services like barbers shops).

This is the way in which banking is productive – and in no other way.

The belief that banking (and finance generally) can be productive in-its-self (without reference to creating things in the physical economy) is mistaken – it is like the bird the explorers are searching for in “Carry On Up The Jungle” – it ends up going up its own……..

]]>By: Paul Markshttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201516
Thu, 18 Feb 2010 20:31:43 +0000http://192.168.200.139/?p=13192#comment-201516Plumus – there is a place (I almost said “a market” – but I am not a Public Choice person and do not think the language is correct for politics) for a person of principle in politics. People WILL vote for such a person – in fact they will vote for them BECAUSE they do not reflect their “economic interests”.

For example, John McCain (for all his many faults) made a point of never “bringing home the bacon” for Arizonia (in this, if in nothing much else, he followed the example of Barry Goldwater) – no earmarks from him.

Now Arizonians are just as greedy as other people – and the State has got some absurd projects over the years. But when faced with someone who treates them as if they were of high moral character most voters (either because they are flattered or because they are shamed) tend to live up to it.

The classic example is the Congressman for Orange County (one of the bits that acutally grows fruit) who always made a point of voting and speaking against subsidies for fruit – even the fruit growers (in fact especially the fruit growers) respected him, and voted for him.

Treat people as people and they may let you down (I accept that), but just assume the voters are scum and you have lost the battle before you even start.

So NO it is not just a few freaks like Ron Paul – even in the House leadership (on the Republican side) both Ryan and Pence are (whatever other flaws they have) are decent people who vote against a lot of evil stuff.

You can do it – indeed it is one way to make a name for yourself in politics.

The way of Pork is not the only way.

]]>By: Alisahttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201515
Thu, 18 Feb 2010 12:12:07 +0000http://192.168.200.139/?p=13192#comment-201515Andrew, we can all get rich by exchanging whatever it is we have a surplus of, be it time, ideas, tomatoes, shoes…Also, see Jonathan’s latest post on the front page.
]]>By: Andrew Duffinhttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201514
Thu, 18 Feb 2010 12:06:10 +0000http://192.168.200.139/?p=13192#comment-201514So we can all get rich by taking in each others’ washing!

I knew it really.

]]>By: Johnathan Pearcehttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201513
Thu, 18 Feb 2010 00:00:48 +0000http://192.168.200.139/?p=13192#comment-201513Gabriel, please, spare the usual silly barbs and grow up. The movement from mass production manufacturing of basic goods in the West towards more specialist fields has been going on for a long time, just as
the creation of surpluses in the agricultural revolution paved the way for the industrial one. There is no reason to think that the changes in manufacturing towards other forms of occupation are entirely down to some sort of regulatory/tax problem, though no doubt these have played a part. But you cannot resist making some silly sneer about us “free marketeer” types, which seems rather odd since we agree 100 per cent, I assume, on the need to remove such regulations/taxes, yes?

As countries in the so-called Third World have used their comparative advantages to earn income, so things have changed. I consider this to be a largely good thing.

Another point to remember is that “service hubs” such as London and New York, with their financial sectors, now, as in the 18th and 19th centuries, now serve a huge, global hinterland, so that London, for example, has a “disproportionately” large focus on financial services. It therefore makes little sense to complain as some do that services make up “too high” a share of UK GDP. No doubt some people might complain that Canadians devote a “disproportionate” amount of activity to growing wheat.

]]>By: samhttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201512
Wed, 17 Feb 2010 18:36:09 +0000http://192.168.200.139/?p=13192#comment-201512I don’t see how you can separate out the lower proportion of manufacturing jobs and the massive monetary expansion over the last 15 years or whatever by the Fed and China buying all that US debt.

What is cause and what is effect?

For my money, without the Fed’s pumping China would not have bought as much debt and both would have meant higher interest rates meaning less financial related jobs and less consumption (flipped burgers?) meaning more saving and less manufacturing jobs lost.

Ergo, this leads me to think that in the absence of the artificial boom the public would have been wealthier consuming manufactured widgets than flipped burgers. Just a guess though

]]>By: Gabrielhttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201511
Wed, 17 Feb 2010 14:49:29 +0000http://192.168.200.139/?p=13192#comment-201511The point is very simple. We were told that the decline of the manufacturing/production economy and the rise of the service economy (and the attendance rise of the former outside of the West) was a consequence of natural market mechanisms based on comparative advantage. But this was always bullshit. The first was a consequence of totally deranged taxation and regulation and the latter of everyone taking out loans they couldn’t afford to pay back.

Those free-marketeers who told us “step back luddites, this is just Free Trade working it’s magic”, were sold a total pup and, in turn, they helped to sell everyone else a pup.

It might be interesting to ask whether, in normal market conditions, the decline of manufacturing/production and the rise of a service economy to replace it would be sustainable and healthy, but it’s totally irrelevant because in normal market conditions it has never actually happened and probably never will.

]]>By: Alisahttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201510
Wed, 17 Feb 2010 12:47:38 +0000http://192.168.200.139/?p=13192#comment-201510BTW, if wealth could only be comprised of physical stuff, than markets would be a zero-sum game, as per socialists. We know it isn’t.
]]>By: Alisahttp://www.samizdata.net/2010/02/a-look-at-the-f/#comment-201509
Wed, 17 Feb 2010 12:45:21 +0000http://192.168.200.139/?p=13192#comment-201509And what about information, knowledge, skills, innovative ideas? Jonathan is absolutely right. And ‘stuff’ is no use (i.e. not wealth) if one doesn’t know what to do with it, etc. I hope Plamus is correct in that Schiff is pandering to the lower denominator of common unwisdom, although I am not sure that in itself is a good idea either.
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